Now that the dust has settled – Pokémon Go and how it makes money

It was a stampede. There have been injuries, violence, deaths. The world is a stranger place now, a place where people shuffle distractedly around in small swarms, eyes agape, hunting.

Is it a zombie apocalypse? No. It’s Pokémon Go.

Estimates had download numbers at over 100 million, with iPhone users spending 33 minutes a day on the app, more time than they spend on Facebook (22 minutes), Twitter (17 minutes) or Instagram (15 minutes). Apple has reportedly said that it had more downloads in its first week than any app has had before. It’s been big.

But then, any number of things have been big for a while, and fallen by the wayside as fads with limited lasting appeal. Look at the Nintendo Wii… The difference this time is that Pokémon Go relies on hardware which is pretty much ubiquitous, and it’s generating money in more ways than one.

In-app purchases

You’d be wrong to describe non-consumable in-app purchases as a license to print money, but I for one am always amazed at how people throw away their pennies with alacrity for an imaginary lucky egg or a lure. This is greatly helped by the seamless purchase process: the app is already synced with players’ iTunes accounts so at no point does it take them out of the game to ask for card details. You can spend between 79p and £80 in one purchase of PokeCoins, exchangeable for the things you’re really after; ways of getting more Pokémon without having to do loads of walking around. This conversion to an imaginary currency removes the whiff of spending real money, also mimicking the confusion tourists have abroad of not really knowing the value of every purchase they make without stopping to do some calculations. SurveyMonkey reckons that the app is hauling in $6 million a day in the US on in-app purchases alone, of which Apple takes 30%, and for their money the players get a little closer to the end goal of catching ‘em all. So it’s a win-win, right?

Sponsorship

In addition, the game opens up a number of opportunities for marketers to exploit their position in the Google Maps-esque world of Pokémon. On the 21st of July the game launched in Japan and McDonalds became the first major sponsor. In exchange for sponsorship, all of the 3000 McDonalds restaurants have become PokeGyms, battlegrounds for players to exercise their virtual quarry. McDonalds is running a line of Pokémon-themed Happy Meals, as if customers hadn’t already got the point. We’ve yet to see how the move will increase sales at McDonalds, or whether the effect will last.

Niantic is also selling ‘sponsored locations’ with advertisers paying on a ‘cost per visit’ basis, similar to ‘cost per click’ but presumably harder to track. On a far smaller scale, individual stores, restaurants and cafes around the world are using Pokemon Go accounts to purchase lures within the game. One coffee franchise owner has described this as “the best ROI we’ve ever seen on marketing” (Warc).

Invisible advertising

In my view, the beauty of this kind of advertising is that as far as the user experience is concerned, there’s no change. The sponsored ‘gyms’ don’t look any different to the ones which already exist in the game, there are no pop-ups and the brands involved have no control over the look and feel of game play. As soon as the leap is made to allowing brands to message players during the game, something valuable will have been lost: nobody enjoys discovering that they’re favourite toy is trying to sell them a frappuccino.

A terrifying new world?

There has been talk of further opportunities in gaming: other games which use the real world as their playground and send players to wander their home towns on foot. There are games which translate well to this format, and rather more disturbing possibilities: Grand Theft Auto Go is, in principle, among the worst ideas I’ve ever heard.